StoneX(SNEX) - 2024 Q4 - Annual Results

Financial Highlights and Overview StoneX Group Inc. reported record fiscal year 2024 results with significant increases in net income and diluted EPS, driven by strong client engagement and diversified offerings Q4 and Fiscal Year 2024 Performance Summary StoneX Group Inc. announced record fiscal year 2024 results, with net income reaching $260.8 million, a 9% increase year-over-year. The fourth quarter was particularly strong, with a record net income of $76.7 million, up 51% from the prior year, and a diluted EPS of $2.32, representing an 18.5% return on equity. The CEO attributed the strong performance to continued client engagement and a diversified product offering | Metric | Q4 2024 | Q4 2023 | % Change | FY 2024 | FY 2023 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net Operating Revenues | $454.8M | $403.7M | +13% | $1,767.2M | $1,621.0M | +9% | | Net Income | $76.7M | $50.7M | +51% | $260.8M | $238.5M | +9% | | Diluted EPS | $2.32 | $1.57 | +48% | $7.96 | $7.45 | +7% | | Return on Equity (ROE) | 18.5% | 15.0% | - | 16.9% | 19.5% | - | - CEO Sean M. O'Connor highlighted strong client engagement with increased volumes across most operating segments, despite low volatility, and noted that the company's expanding global footprint and diversified product offering are key to its success[2] Consolidated Financial Performance The company achieved substantial growth in net operating revenues and net income for both Q4 and the full fiscal year, primarily driven by strong performance in securities and listed derivatives Consolidated Income Statement The company reported significant year-over-year growth in both Q4 and full-year net income, driven by a 13% increase in quarterly net operating revenues to $454.8 million and a substantial 96% reduction in full-year bad debt expenses. Diluted EPS for the full fiscal year rose 7% to $7.96 | (in millions, except per share amounts) | Q4 2024 | Q4 2023 | % Change | FY 2024 | FY 2023 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net operating revenues | $454.8 | $403.7 | 13% | $1,767.2 | $1,621.0 | 9% | | Total compensation and other expenses | $356.8 | $330.2 | 8% | $1,421.9 | $1,323.4 | 7% | | Income before tax | $98.1 | $75.4 | 30% | $354.1 | $323.0 | 10% | | Net income | $76.7 | $50.7 | 51% | $260.8 | $238.5 | 9% | | Diluted EPS | $2.32 | $1.57 | 48% | $7.96 | $7.45 | 7% | - A three-for-two stock dividend was effected on November 24, 2023. All share and per share amounts in the report have been retroactively adjusted to reflect this stock split[4] Revenue and Income by Segment The Institutional segment was the primary driver of growth, with operating revenues increasing 30% and segment income rising 41% in Q4 2024 year-over-year. The Self-Directed/Retail segment also showed strong income growth of 160% for the full fiscal year, while the Payments segment experienced a decline in both quarterly revenue and income | Operating Revenues (in millions) | Q4 2024 | Q4 2023 | % Change | FY 2024 | FY 2023 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Commercial | $210.8 | $207.5 | 2% | $871.9 | $862.7 | 1% | | Institutional | $554.1 | $426.5 | 30% | $1,962.1 | $1,513.6 | 30% | | Self-Directed/Retail | $104.3 | $92.4 | 13% | $395.0 | $333.0 | 19% | | Payments | $48.6 | $54.2 | (10)% | $209.6 | $212.6 | (1)% | | Total Operating Revenues | $920.1 | $778.0 | 18% | $3,436.2 | $2,914.1 | 18% | | Segment Income (in millions) | Q4 2024 | Q4 2023 | % Change | FY 2024 | FY 2023 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Commercial | $89.2 | $88.0 | 1% | $387.7 | $390.7 | (1)% | | Institutional | $77.3 | $55.0 | 41% | $266.0 | $217.9 | 22% | | Self-Directed/Retail | $29.8 | $28.0 | 6% | $119.3 | $45.8 | 160% | | Payments | $24.8 | $32.3 | (23)% | $112.6 | $109.1 | 3% | | Total Segment Income | $221.1 | $203.3 | 9% | $885.6 | $763.5 | 16% | Revenue by Product and Key Metrics Growth was led by Securities, which saw a 34% increase in operating revenues for the quarter, supported by a 34% rise in average daily volume. Listed derivatives also contributed positively with a 20% revenue increase on 46% higher contract volumes. Conversely, OTC derivatives and Payments revenues declined, primarily due to lower rates per contract | Operating Revenues by Product (in millions) | Q4 2024 | Q4 2023 | % Change | FY 2024 | FY 2023 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Listed derivatives | $118.2 | $98.6 | 20% | $469.6 | $416.5 | 13% | | OTC derivatives | $46.2 | $59.9 | (23)% | $209.9 | $232.2 | (10)% | | Securities | $411.8 | $308.3 | 34% | $1,442.7 | $1,064.0 | 36% | | FX/CFD contracts | $84.7 | $79.2 | 7% | $316.1 | $261.9 | 21% | | Payments | $47.3 | $52.9 | (11)% | $205.1 | $208.3 | (2)% | - Key volume and rate changes for Q4 2024 vs Q4 2023: - Listed derivatives: Volume up 46%, but average rate per contract (RPC) down 15% - OTC derivatives: Volume up 4%, but average RPC down 26% - Securities: Average daily volume (ADV) up 34%, while rate per million (RPM) was down slightly by 3% - Payments: ADV up 13%, but RPM down 20%[7] Analysis of Revenue and Expense Changes The 18% increase in quarterly operating revenues was primarily driven by a $103.5 million rise in securities revenues due to a 34% increase in average daily volume and higher interest rates. Interest expense also grew 27% for the quarter, mainly from institutional fixed income activities and corporate funding changes related to a new note issuance and the temporary overlap with a redeemed note - Operating revenue from securities transactions increased by $103.5 million in Q4, driven by a 34% increase in securities ADV and higher interest rates[8] - OTC derivatives operating revenues declined by $13.7 million, mainly due to a 26% drop in the average rate per contract caused by lower commodity volatility[8] | Interest Expense (in millions) | Q4 2024 | Q4 2023 | % Change | FY 2024 | FY 2023 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Trading activities | $323.5 | $253.2 | 28% | $1,115.7 | $802.2 | 39% | | Corporate funding | $14.3 | $13.3 | 8% | $67.8 | $57.5 | 18% | | Total interest expense | $337.8 | $266.5 | 27% | $1,183.5 | $859.7 | 38% | - The increase in interest expense on corporate funding was primarily due to the issuance of 7.875% Senior Secured Notes due 2031 in March 2024, which were used to redeem 8.625% notes in June 2024, resulting in a temporary period where both notes were outstanding[8] Expense Structure The company's expense structure remained stable, with variable expenses accounting for 51% of total non-interest expenses in Q4 2024, consistent with the prior-year quarter. For the full fiscal year, variable expenses represented 52% of the total. Total non-interest expenses grew 11% year-over-year for the quarter | Expense Type (in millions) | Q4 2024 | % of Total | Q4 2023 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Total variable expenses | $247.8 | 51% | $220.2 | 51% | | Total non-variable expenses | $236.5 | 49% | $217.8 | 49% | | Total non-interest expenses | $484.3 | 100% | $438.0 | 100% | Segment Performance Analysis Segment performance varied, with strong growth in Institutional and Self-Directed/Retail segments, while Commercial remained stable and Payments experienced a decline in quarterly income Commercial Segment The Commercial segment's income remained flat year-over-year at $89.2 million for the quarter, while full-year income saw a slight 1% decline. Quarterly operating revenues grew 2%, driven by a 22% increase in listed derivatives revenue. This was largely offset by a 23% decline in OTC derivatives revenue due to lower volatility and a corresponding 26% drop in the average rate per contract. A significant 97% reduction in bad debts for the quarter was a positive contributor | Commercial Segment (in millions) | Q4 2024 | Q4 2023 | % Change | FY 2024 | FY 2023 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Operating revenues | $210.8 | $207.5 | 2% | $871.9 | $862.7 | 1% | | Net operating revenues | $167.8 | $169.9 | (1)% | $715.9 | $721.3 | (1)% | | Segment income | $89.2 | $88.0 | 1% | $387.7 | $390.7 | (1)% | - In Q4, listed derivatives revenue grew 22% to $65.2 million, while OTC derivatives revenue fell 23% to $46.2 million. The decline in OTC was driven by a 26% drop in the average rate per contract[17] Institutional Segment The Institutional segment delivered strong growth, with quarterly segment income rising 41% to $77.3 million and full-year income up 22%. This performance was driven by a 30% increase in operating revenues for both the quarter and full year, primarily from a 35% surge in quarterly securities revenues due to a 34% increase in average daily volume | Institutional Segment (in millions) | Q4 2024 | Q4 2023 | % Change | FY 2024 | FY 2023 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Operating revenues | $554.1 | $426.5 | 30% | $1,962.1 | $1,513.6 | 30% | | Net operating revenues | $174.3 | $130.6 | 33% | $630.4 | $532.0 | 18% | | Segment income | $77.3 | $55.0 | 41% | $266.0 | $217.9 | 22% | - Securities revenue was the main growth driver, increasing 35% to $385.0 million in Q4, fueled by a 34% rise in securities ADV to $7,574 million[20] - Listed derivatives revenue also grew, up 18% in Q4, on the back of a 55% increase in contract volumes[20] Self-Directed/Retail Segment This segment's income grew 6% to $29.8 million for the quarter and an impressive 160% to $119.3 million for the full fiscal year. Quarterly operating revenues increased 13%, primarily driven by a 10% rise in FX/CFD contract revenues and a 14% increase in securities revenues. Full-year revenue growth was 19% | Self-Directed/Retail Segment (in millions) | Q4 2024 | Q4 2023 | % Change | FY 2024 | FY 2023 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Operating revenues | $104.3 | $92.4 | 13% | $395.0 | $333.0 | 19% | | Net operating revenues | $76.3 | $67.5 | 13% | $286.1 | $227.3 | 26% | | Segment income | $29.8 | $28.0 | 6% | $119.3 | $45.8 | 160% | - Quarterly revenue from FX/CFD contracts increased 10% to $74.8 million, driven by a 7% increase in ADV and a 3% increase in RPM[22] Payments Segment The Payments segment experienced a 23% decline in quarterly income to $24.8 million, though full-year income rose by 3%. The quarterly drop was a result of a 10% decrease in operating revenues, caused by a 20% decrease in the rate per million (RPM), which more than offset a 13% increase in average daily volume (ADV) | Payments Segment (in millions) | Q4 2024 | Q4 2023 | % Change | FY 2024 | FY 2023 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Operating revenues | $48.6 | $54.2 | (10)% | $209.6 | $212.6 | (1)% | | Net operating revenues | $45.8 | $51.6 | (11)% | $199.5 | $203.3 | (2)% | | Segment income | $24.8 | $32.3 | (23)% | $112.6 | $109.1 | 3% | - The decline in quarterly revenue was driven by a 20% fall in Payments RPM to $10,658, even as Payments ADV grew 13% to $70 million[24] Overhead Costs and Expenses Total overhead costs and expenses increased by 2% in Q4 2024 to $113.6 million, and by 16% for the full fiscal year to $466.8 million. The company began allocating certain overhead costs to its operating segments during the quarter, totaling $39.2 million, which includes costs for compliance, technology, credit, and risk | Overhead Costs (in millions) | Q4 2024 | Q4 2023 | % Change | FY 2024 | FY 2023 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Compensation and benefits | $62.7 | $61.9 | 1% | $261.4 | $224.0 | 17% | | Other expenses | $50.9 | $49.9 | 2% | $205.4 | $176.9 | 16% | | Total Overhead Costs | $113.6 | $111.8 | 2% | $466.8 | $400.9 | 16% | - Beginning in Q4 2024, the company started allocating overhead costs to its operating segments. For the quarter, $39.2 million was allocated[13][25] Balance Sheet Summary The company's balance sheet expanded significantly, with total assets and stockholders' equity increasing, driven by growth in securities financing activities and client payables Key Balance Sheet Items As of September 30, 2024, total assets grew significantly, driven by increases in securities financing activities. Cash and segregated cash equivalents rose to a combined $4.1 billion. Stockholders' equity increased by $330 million to $1.71 billion compared to the prior year | (in millions) | Sep 30, 2024 | Sep 30, 2023 | | :--- | :--- | :--- | | Total Assets | $27,266.3 | $21,938.7 | | Cash and cash equivalents | $1,269.0 | $1,108.3 | | Financial instruments owned, at fair value | $6,767.1 | $5,044.8 | | Total Liabilities | $25,557.2 | $20,559.6 | | Payables to clients | $10,345.9 | $9,976.0 | | Securities sold under agreements to repurchase | $8,581.3 | $4,526.6 | | Stockholders' equity | $1,709.1 | $1,379.1 | Non-GAAP Financial Measures Adjusted non-GAAP financial measures, excluding acquisition-related impacts, show improved comparability and an 18% increase in adjusted net income for FY2024 Reconciliation of GAAP to Non-GAAP Results To enhance comparability, the company adjusts its GAAP results to exclude gains on acquisition and amortization of related intangible assets. For Q4 2024, this adjustment resulted in an adjusted net income of $77.4 million, compared to the GAAP net income of $76.7 million. For the full fiscal year, adjusted net income was $264.2 million, 18% higher than the prior year's adjusted figure - Management presents non-GAAP financial measures to exclude the impact of gains on acquisition and amortization of intangible assets from the CDI (acquired Oct 2022) and Gain Capital (acquired Aug 2020) acquisitions, believing it increases comparability[11][31] | (in millions) | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | :--- | | Net income (GAAP) | $76.7 | $50.7 | $260.8 | $238.5 | | Gain on acquisition, net of tax | — | — | — | (23.5) | | Acquisition related expense, net of tax | 0.7 | 1.4 | 3.4 | 8.0 | | Adjusted net income (non-GAAP) | $77.4 | $52.1 | $264.2 | $223.0 | | Return on Equity | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | :--- | | ROE (GAAP) | 18.5% | 15.0% | 16.9% | 19.5% | | Adjusted ROE (non-GAAP) | 18.7% | 15.4% | 17.1% | 18.2% | Corporate Information and Forward-Looking Statements StoneX Group Inc. is a global Fortune-500 financial services firm, providing an overview of its operations and a standard cautionary statement regarding forward-looking information Company Overview and Contact StoneX Group Inc. is a Fortune-500 financial services firm headquartered in New York, operating a global network that connects clients to markets. With over 4,500 employees in more than 80 offices, the company serves over 54,000 commercial, institutional, and payments clients, and over 400,000 retail accounts. A conference call to discuss the financial results is scheduled for November 20, 2024 - A conference call to discuss the financial results will be held on Wednesday, November 20, 2024, at 9:00 a.m. Eastern time[28] - StoneX Group is a Fortune-500 company with over 4,500 employees serving more than 54,000 commercial, institutional, and payments clients, and over 400,000 retail accounts from more than 80 offices across six continents[29] Forward-Looking Statements This section contains a standard safe harbor statement under the Private Securities Litigation Reform Act of 1995. It cautions that forward-looking statements in the press release are based on current expectations and are subject to risks and uncertainties, meaning actual results could differ materially. The company does not commit to updating these statements - The press release contains forward-looking statements that are subject to risks, uncertainties, and assumptions described in the Company's SEC filings. Readers are cautioned not to place undue reliance on these statements[30]